Exhibit
10.13


 


EMPLOYMENT
AGREEMENT


 


THIS
AGREEMENT, dated as of January 12, 2004, between
Innocoll, Inc., a Delaware corporation with its registered office
located at 103 Springer Building, 3411 Silverside
Road, Wilmington, Delaware 19810 or its assignee (the “Company”), and David Prior, an individual
residing at 1B Cumberland Close, Ruddington, Nottingham, NG11 6PH
UK (the “Employee”),


 


Background


 


A.          The
Company wishes to employ the Employee and the Employee wishes to be employed by the Company, subject
to the terms and conditions set forth in this Agreement; and


 


B.          The
parties acknowledge that this Agreement is intended to set forth the parties entire agreement
with respect to the Company’s employment of Employee.


 


Agreements


 


NOW,
THEREFORE, in consideration of the mutual benefits to be derived from this Agreement,
and intending to be legally bound, the Company and the Employee hereby agree as follows:


 


1.           Definitions.
   As used in this Agreement, the following terms shall have the meanings as set forth below:


 


		1.1	“Affiliate”
                                         of any Person means any Person directly or indirectly controlling, controlled by or under
                                         common control with such Person including without limitation any direct or indirect Subsidiary
                                         of such Person.



 


		1.2	“Company’s
                                         Business” means:



 


		(a)	the
                                         business of development and commercialization of products based on the Company’s
                                         proprietary collagen based drug delivery technologies, including without limitation proprietary
                                         collagen products that are administered by implantation, topically, bucally, orally or
                                         intra-ocularly; and



 


		(b)	such
                                         other business or enterprise conducted by the Company during the Term of this Agreement;
                                         and



 


		(c)	any
                                         other business
                                         or enterprise conducted by any Affiliate of
                                         Company during the Term of this Agreement in which Employee has been involved while
                                         an employee of Company or any such Affiliate.



 




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		1.3	“Confidential
Matters” includes all technical, commercial and business or other data and information (including new product plans, invoices,
customer correspondence, customer business cards, computer records or mailing, telephone or customer of lists) of Company or its
Affiliates, and tangible and intangible property of Company or its Affiliates (including intellectual property of Company or its
Affiliates or licensors) related to the products or business of Company or its Affiliates, including but not limited to trade
secrets, designs, devices, inventions, improvements, ideas, strategies, concepts, discoveries, techniques, processes, methods
of operation, sales and profit figures, know-how, expressions of ideas and systems, software, firmware, microcode, source code
and object code, routines, subroutines, and algorithms, structure, sequence and organization of computer programs, specifications,
and other related data, whether or not patentable.



 


		1.4	“Effective
                                         Date” means January 19, 2004.



 


		1.5	“Exit
                                         Date” means the date on which Employee ceases, for any reason whatsoever, to be
                                         employed by Company or any of its Affiliates.



 


		1.6	“Inventions”
                                         includes inventions, discoveries, ideas, techniques, methods, developments, improvements,
                                         modifications, and all other forms of intellectual property, whether or not patentable.



 


		1.7	“Person”
                                         means an individual, a company, a corporation, a partnership, an association, a trust
                                         or other entity or organization.



 


		1.8	“Restrictive
                                         Period” means the period of time equal to the Term of this Agreement plus the one
                                         (l) year period immediately following the Exit Date.



 


		1.9	“Restricted
                                         Territory” shall mean everywhere in the world”.



 


		1.10	“Subsidiary”
                                         means any corporation of which Company owns or controls directly, or indirectly through
                                         one or more Affiliates or other Subsidiaries, more than fifty percent (50%) of the combined
                                         voting power of all of the issued and outstanding shares of capital stock of such corporation
                                         and includes, without limitation, Syntacoll (Pty) Ltd. (a South African corporation),
                                         Syntacoll, A.G. (a Swiss corporation), and Innocoll GmbH (a German corporation).



 


		1.11	“Term”
                                         or “Term of this Agreement”
                                         means the period commencing
                                         as of the Effective Date
                                         and continuing until the Exit
                                         Date.



 


		2.	No
                                         Prior Agreement. Employee acknowledges that this Agreement is intended to set forth
                                         the parties’ entire understanding and agreement regarding Employee’s employment with
                                         Company or its Affiliates. Additionally, Employee represents to Company, and covenants and agrees,
                                         that he/she is not currently subject to, and



 




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			 shall not
                                         during the Term of this Agreement become
                                         subject to, any employment agreement, confidentiality
                                         agreement, non-competition agreement, non-disclosure agreement
                                         or any other agreement, covenant, understanding
                                         or restriction which would prohibit Employee
                                         from fully observing and performing his/her
                                         duties and responsibilities to Company or would otherwise
                                         in any manner, directly or indirectly, limit or affect
                                         (i) the duties and responsibilities which may now or in the future be assigned
                                         to Employee by Company, or (ii) otherwise prevent Employee from
                                         performing in accordance with the terms
                                         and conditions set forth in this Agreement.



 


		3.	Employment.
                                         During the Term of this Agreement and subject
                                         to Company’s right to assign the Agreement as
                                         described in Section 13 below, Company
                                         employs Employee and Employee accepts such employment
                                         in accordance with the terms and conditions of this Agreement including without limitation:



 


		3.1	Employee
                                         shall serve as Senior Director of
                                         Business Development of the Company and
                                         shall perform all duties and accept all responsibilities assigned to him/her by the President
                                         of the Company.



 


		3.2	Employee’s
                                         place of performance
                                         will be at such locations as may be necessary to
                                         fulfill his/her job responsibilities under this Agreement or as may be assigned by the
                                         President of the Company. Employee acknowledges and agrees to travel from time to time
                                         as required to perform his/her duties and responsibilities under this Agreement to or
                                         on behalf of the Company or any of its Affiliates.



 


		3.3	For
                                         all services rendered by Employee, Company shall
                                         pay Employee an initial annual base compensation
                                         (“Base Salary”) in the amount of UK Pounds Sterling Eighty Thousand (£80,000.00).
                                         less any withholding required by law or agreed to by Employee, payable in installments
                                         at such time as Company customarily pays its other
                                         employees. Employee’s Base Salary will
                                         be reviewed annually by the CEO to determine
                                         if an increase is appropriate. Such increase, if any, shall be in the sole discretion
                                         of the CEO. Should the Company, in its discretion, increase Employee’s salary, any such
                                         increase shall be stated in writing.



 


		3.4	Company
                                         shall provide Employee with such retirement, profit sharing, group insurance (including
                                         without limitation life, health, and disability insurance), and other fringe benefits
                                         (“Benefits”) as Company in its sole discretion provides from time to time
                                         for other employees of Company generally.



 


		3.5	Employee
                                         shall receive a monthly
                                         automobile allowance of UK Pounds Sterling Four Hundred Fifty (£450) per month
                                         net of all taxes payable on such allowance.



 


		3.6	Employee
                                         shall be entitled to five (5) weeks paid vacation annually.



 




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		3.7	Annually
throughout the employment relationship, the Board of
Directors of the Company (the “Board”) shall establish annual
corporate goals and objectives (“Annual Corporate
Goals”) and annual
individual goals and objectives (“Annual
Individual Goals”) applicable to Employee for the then current
calendar year which shall
be embodied in resolutions duly adopted by the Board. In the event
that Company shall fully achieve all
of the Annual Corporate Goals and Employee shall fully achieve all
of his/her Annual
Individual Goals applicable to any calendar year,
Employee shall be
entitled to a performance bonus
(“Performance Bonus”) in an amount
determined by the Board, provided
however that in no event shall the Performance
Bonus be less than twenty percent (20%) nor more than
fifty percent (50%) of Employee’s Base Salary applicable
as of December 31 of such calendar
year (prorated for calendar
year 2004 based on the Effective
Date). Such Performance Bonus shall be payable
at such time and in such
manner during the one hundred twenty (120) day period immediately
following December 31 of such calendar year as
the Board shall determine in its sole
discretion.



 


		3.8	Employee
                                         shall be entitled to such stock options, if
                                         any, as the Board shall
                                         from time to time determine in its sole discretion.



 


		4.	No
                                         Solicitation/Hire. At
                                         any time during
                                         the Term
                                         of this Agreement or
                                         during the one
                                         (1) year period immediately
                                         following the Exit Date,
                                         Employee shall not, either directly
                                         or indirectly, employ
                                         or solicit the employment (the “Employment/Solicitation”)
                                         of any Person, or engage or solicit the
                                         engagement as a consultant of any Person, who is at the time of the Employment/Solicitation
                                         then currently employed by, or providing consulting services to,
                                         the Company or any of
                                         its Affiliates on a full
                                         or part-time basis.



 


		5.	Covenant-Not-To-Compete.
                                         During the Restrictive Period, Employee
                                         shall not, and shall not encourage or permit
                                         any of his/her Affiliates, or any other Person, directly or indirectly, to:



 


		5.1	engage
                                         in competition with, or acquire
                                         a direct or indirect interest or an option to
                                         acquire such an interest in
                                         any Person engaged in competition with, Company’s
                                         Business anywhere
                                         in the Restricted Territory (other than an interest
                                         of not more than five percent (5%)
                                         of the outstanding stock
                                         of any publicly traded company);



 


		5.2	serve
                                         as a director, officer,
                                         employee, consultant, agent
                                         or representative of, or furnish information
                                         to, or otherwise facilitate
                                         in any way (including but not limited to
                                         providing financial support)
                                         the efforts of, any Person engaged in competition with Company’s Business anywhere
                                         in the Restricted Territory.



 




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		5.3	approach
                                         for any business or commercial purpose that competes with Company’s Business, solicit
                                         or deal
                                         with any Person who at any time
                                         during the Term of this Agreement is or was:



 


		(a)	a
                                         customer, client, supplier, agent or distributor of Company or any Affiliate;



 


		(b)	a
                                         customer, client, supplier, agent or distributor
                                         of Company or any Affiliate with whom employees
                                         reporting to or under Employee’s direct control had personal contact on behalf
                                         of Company or any Affiliate;
                                         or



 


		(c)	a
                                         Person with whom Employee had regular, substantial or a series of business dealings on
                                         behalf of Company or any Affiliate (whether or
                                         not a customer, client, supplier, agent or
                                         distributor of Company or any Affiliate).



 


			The
                                         Restrictive Period shall be automatically extended for any period of time during
                                         which the Employee has breached, or threatened to breach, any provisions of this
                                         Section 5. Employee acknowledges that Company and its Affiliates are conducting
                                         business in the Restricted Territory and therefore
                                         the geographic scope of the covenants
                                         set forth in this Section 5 is reasonable and
                                         necessary to protect the interests of Company.



 


		6.	Benefits
                                         Payable Upon Termination of Employment.



 


		6.1	Upon
                                         termination of Employee’s employment by
                                         Company, other than by reason of any of the events set forth in Section 6.2 below, Employee
                                         shall be entitled to the following:



 


		(a)	Compensation.
Employee shall be entitled to Base Salary payable in installments and in such
amounts as were in effect on the date of termination of
Employee’s employment shall continue until
the earlier of (i) six (6) months after the date the employment relationship between
Company and Employee ends, or (ii) Employee
becomes employed or engaged on a full-time basis.



 


		(b)	Employee
                                         Benefits. Employee shall be entitled
                                         to a continuation of
                                         all medical, dental and life insurance benefits in the
                                         same manner and amount to which
                                         Employee was entitled on the date of
                                         termination of Employee’s employment until the
                                         earlier of (i) six (6) months after termination
                                         of Employee’s employment by Company or
                                         its Affiliates, or (ii) Employee’s eligibility for similar
                                         benefits with any new employer or other
                                         Person.



 


		6.2	Employee
                                         shall not be entitled to
                                         any compensation or Benefits of any nature, including
                                         without limitation those referred in Section 6.1
                                         of this Agreement, other than unpaid
                                         Base Salary and Benefits accrued to the Exit



 




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			Date,
                                         in the event that the employment relationship
                                         between Company and Employee ends by reason of: death;
                                         Employee’s inability with reasonable accommodation
                                         to perform fully his/her duties and responsibilities
                                         to Company to the full extent required by the
                                         Board by reason of illness, injury or incapacity for ninety (90)
                                         days in the aggregate during any period
                                         of twelve (12) consecutive calendar months,
                                         during which time Company shall continue
                                         to compensate Employee, subject to the provisions
                                         of Section 10, below; Employee’s conviction
                                         of any misdemeanor or felony pertaining to or involving
                                         dishonesty, harassment or violence; Employee’s
                                         willful misconduct; Employee’s
                                         refusal to implement or observe any directive of the
                                         CEO or
                                         the Board; Employee’s
                                         breach, violation or default of any of the representations,
                                         duties or obligations imposed upon Employee pursuant to this
                                         Agreement and the failure to cure the same
                                         as permitted by this Agreement; Employee’s
                                         failure to fully perform such performance standards
                                         as shall be determined from time to
                                         time by the Board; or a good faith determination
                                         by the Board or Company’s outside accountants that
                                         Company is insolvent using the balance
                                         sheet test or is unable to pay its debts as
                                         they mature.



 


		6.3	Except
                                         as otherwise specifically provided in this Agreement or
                                         required by applicable law, upon termination
                                         of the employment relationship between Company and Employee, all duties and obligations
                                         of Company to Employee and all rights,
                                         remedies, compensation, Benefits, privileges, grants and options of
                                         Employee shall cease and terminate as of the
                                         Exit Date.



 


		7.	Inventions;
                                         Company Property.



 


		7.1	All
                                         rights in Inventions
                                         which Employee conceives, makes or obtains either alone or
                                         with others during his/her employment by Company or its Affiliates (both
                                         before and after the Effective Date of this
                                         Agreement) and within six months after his/her employment
                                         ends, are and shall be the property of
                                         Company except as
                                         set forth in Section 7.2 hereof.



 


		7.2	This
                                         Agreement does not apply to
                                         Inventions that Company determines in
                                         its sole discretion to be unrelated to
                                         any matter of actual or potential interest
                                         to Company unless they are conceived, made or
                                         obtained in the course of his/her employment
                                         or with the use of
                                         the time, material or facilities of
                                         Company.



 


		7.3	Employee
                                         shall make full and prompt disclosure to Company
                                         of all Inventions that are defined by this Section 7 to be Company’s property.
                                         At Company’s request and expense (but without additional compensation to Employee),
                                         Employee shall at any time take such actions as Company reasonably considers necessary
                                         to obtain or preserve Company’s rights in such Inventions. These actions may include,
                                         but are not necessarily



 




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			limited to, signing
                                         and delivering applications, assignments and other papers and testifying in legal
                                         proceedings.



 


		8.	Confidential
                                         Information, Employee shall not,
                                         during or after his/her
                                         employment with
                                         Company or any of its Affiliates, use for
                                         his/herself or others,
                                         or disclose to others, any
                                         formulae, trade secrets, customer lists, know-how, Inventions which are Company’s
                                         property, or other
                                         Confidential Matters of Company
                                         or its Affiliates unless authorized
                                         in writing to do so by
                                         Company or its Affiliates, Employee understands that
                                         these matters are kept
                                         confidential and secret by Company, would
                                         be of great value to
                                         competitors, and would
                                         irreparably
                                         harm Company if known
                                         to competitors.



 


		9.	Remedies.
                                         Upon any breach,
                                         violation or default by either party to this Agreement (“Defaulting Party”)
                                         of any of the representations,
                                         duties or obligations imposed upon such
                                         Defaulting Party pursuant to this Agreement,
                                         and the failure of
                                         such Defaulting Party
                                         to cure such breach, violation
                                         or default within ten (10) days of
                                         the date of the giving
                                         of notice by the other
                                         party to this Agreement
                                         (“Non-Defaulting Party”), the
                                         Non-Defaulting Party
                                         shall have all rights
                                         and remedies which are contained
                                         in this Agreement and
                                         all other rights and
                                         remedies which are at
                                         law, in equity or by
                                         statute permitted or provided, all such rights and remedies to
                                         be cumulative
                                         and concurrent.



 


		10.	Disability
                                         Payments. In the event that
                                         Company shall obtain
                                         or procure any disability or similar insurance
                                         which makes payments to Employee
                                         (“Disability Payments”)
                                         on account of Employee being unable
                                         to perform his/her
                                         duties and obligations
                                         to Company by reason
                                         of illness, injury
                                         or incapacity, the
                                         aggregate amount
                                         of such Disability Payments shall constitute
                                         a credit on a dollar for dollar basis
                                         against all amounts,
                                         including without limitation Base Salary, owing
                                         by Company to Employee and
                                         shall decrease on a dollar
                                         for dollar basis such amounts owing by Company, and Company shall be released to
                                         such extent.



 


		11.	Papers.
                                         All correspondence, memoranda, notes, records,
                                         reports, drawings, lists,
                                         photographs, plans and
                                         other papers and items
                                         received or made by Employee
                                         in connection with his/her
                                         employment by Company
                                         shall be the property
                                         of Company. Employee
                                         shall deliver all
                                         such materials, all copies thereof in whatever form stored, and
                                         all other Company
                                         property to Company upon request of Company,
                                         and in any event upon
                                         cessation of
                                         his/her employment with the Company for
                                         any reason,
                                         even if
                                         Company does not request.



 


		12.	Enforcement.
                                         Employee acknowledges the
                                         restrictions contained
                                         in this Agreement are,
                                         in view of
                                         the nature of the business
                                         of Company, reasonable
                                         and necessary to
                                         protect the legitimate
                                         interests of the Company,
                                         and that any breach, violation or
                                         default by Employee of any
                                         of such restrictions, including
                                         the representations, covenants, duties or obligations
                                         imposed upon Employee pursuant to this
                                         Agreement, shall cause
                                         Company immediate and
                                         irreparable harm for
                                         which Company’s remedies
                                         at law (such as money
                                         damages) will be inadequate.
                                         Company shall have the
                                         right, in addition to
                                         any other rights it may



 




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have,
to obtain injunctive
relief, including a temporary restraining order and a preliminary and
permanent injunction, to restrain any breach or threatened breach of
this Agreement, without the necessity of
proving actual damages, and the right to an
equitable accounting of all earnings, profits and other benefits arising from
any such breach, which rights shall be cumulative and in addition
to any other rights or remedies to
which the Company may be entitled. Employee agrees that in the event of
any such breach, an action
may be commenced for any such temporary restraining order, preliminary or permanent injunction
and other equitable relief in any court of competent
jurisdiction sitting in England or Wales. Employee hereby waives, to the fullest
extent permitted by law,
any objection that Employee
may now or hereafter have to such jurisdiction or to the laying of the venue of
any such suit, action or proceeding brought
in such court and any claim that such suit, action or proceeding has been brought
in an inconvenient forum. Employee agrees that effective
service of process may be
made upon Employee by
mail under the notice
provisions of Section 14 of this Agreement. Should
any provision of this Agreement be adjudged to any extent
invalid by any competent tribunal,
that provision shall
be deemed modified to the extent necessary to make
it enforceable. Company may
contact any Person with or for whom
Employee works after his/her employment by Company
ends for the purpose of
enforcing the Covenant-Not-To-Compete
and may send that Person
a copy of this Agreement.


 


		13.	Binding
Effect Assignment.



 


		13.1	Employee’s
                                         undertakings hereunder shall bind
                                         his/her and his/her heirs
                                         and legal representatives
                                         regardless of (a) the duration of
                                         his/her
                                         employment by Company, (b)
                                         any change in
                                         his/her duties or the nature of his/her
                                         employment, (c) the reasons for or manner of
                                         termination of his/her employment, and (d)
                                         the amount of his/her compensation. The
                                         duties and responsibilities of Employee to Company are
                                         of a personal nature
                                         and shall not be assignable or delegatable in
                                         whole or in part
                                         by Employee. Company
                                         shall have the absolute right
                                         to assign all or any part of this
                                         Agreement without the consent
                                         of Employee. In
                                         the event of any assignment by Company
                                         of this Agreement, Company’s assignee shall have the right
                                         to enforce each of the provisions
                                         of this Agreement, including without limitation Sections 4, 5, 7, 8, 9 and
                                         12 of this Agreement
                                         and in such event, as
                                         used in this Agreement, “Company” shall include without
                                         limitation any assignee
                                         or other successor to its business
                                         or assets.



 


		13.2	In
                                         furtherance and not by way of limitation of
                                         Section 13.1 above,
                                         Employee acknowledges that prior
                                         to the Effective Date, the Company intends
                                         to form a
                                         UK subsidiary
                                         (“Innocoll UK Ltd.”) to which Company
                                         anticipates assigning all
                                         of its rights under this Agreement and
                                         which after such
                                         assignment shall be the employer of Employee under this Agreement. Employee hereby consents
                                         and agrees to such assignment and agrees to render services to Innocoll UK Ltd. as its
                                         employee with the same force



 




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			and effect as if Innocoll
UK Ltd. were the “Company” under this Agreement.



 


		14.	Notices.
                                         All notices, requests, demands and other communications in connection with this Agreement
                                         shall be in writing and shall be personally delivered or sent by expedited overnight
                                         courier as follows:



 


If
to the Company:


 


Innocoll,
Inc.


103
Springer Building


3411
Silverside Road


Wilmington,
DE 19810


 


With
a copy to:


 


White
and Williams LLP


1800
One Liberty Place


Philadelphia,
PA 19103


Attention:
Gary P. Biehn, Esq.


 


If
to Employee:


 


David
Prior


1B
Cumberland Close


Haddington


Nottingham


NG116PH 


UK


 


and/or
to such other persons and addresses as any party shall have specified in writing to the other.


 


		15.	Miscellaneous.
                                            This Agreement (a) establishes an at will employment relationship between Company
                                         and Employee and shall in no way bind Employee or Company to a specific term of employment,
                                         (b) supersedes all prior understandings, discussions, negotiations, correspondence and
                                         other writings and constitutes the entire understanding between Company and Employee
                                         about the subject matter covered by this Agreement, (c) may be modified or varied only
                                         by mutual agreement in writing signed by Company and Employee, (d) shall, in the case
                                         of the provisions of Section 4, 5, 6, 7, 8, 9 and 12, survive the termination of the
                                         employment relationship between Company and Employee, (e) is subject to a contingent
                                         and conditioned upon approval by the Board and shall not be binding upon Company unless
                                         and until such approval by the Board is given, and (f) will be governed by the laws of
                                         England and Wales without giving effect to any conflict of laws provisions.



 




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IN
WITNESS WHEREOF, the parties to this
Agreement have executed this Agreement as
of the day and year first written above.


 


	 	 	INNOCOLL,
    INC.
	 	 	 
	 	BY:	/s/ Michael Myers
	 	 	President
	 	 	 
	 	 	EMPLOYEE:
	 	 	 
	 	 	/s/ David Prior
	 	 	David Prior


 




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